Photronics (PLAB Quick QuotePLAB - Free Report) reported fourth-quarter fiscal 2021 earnings of 33 cents per share, which beat the Zacks Consensus Estimate by 32% and jumped significantly from 10 cents reported in the year-ago quarter.

Revenues of $181.3 million also beat the consensus mark by 3.59% and increased21.4% on a year-over-year basis.

Following impressive third-quarter results, Photronics’ shares jumped 26% to close at $17.91 on Dec 8. Photronics’ shares are up 60.5% year to date compared with 27.4% growth of the Zacks Semiconductor Equipment- Photomasks industry and 25.5% rise of the Zacks Computer & Technology sector.

Quarter Details

Integrated Circuit (“IC”) revenues were $125.4 million, up 18% year over year. Flat Panel Display (“FPD”) revenues increased 6% year over year to $55.8 million.

Both IC and FPD segments benefited from strong demand across mainstream and high-end products.
 

Photronics, Inc. Price, Consensus and EPS Surprise

Photronics, Inc. price-consensus-eps-surprise-chart | Photronics, Inc. Quote

In IC, the high-end business grew primarily from logic demand from major foundries, while memory demand remained fairly stable.

FPD strength was driven by displays for mobile applications as well as a recovery in mainstream LCD demand.

Photronics stated that demand remains strong in China and Taiwan. The company, along with its joint-venture partner, is investing in expanding capacity in Taiwan.

China currently represents 37% of Photronics’ total revenues. The company stated that in FPD, photomask demand in China continued to increase as panel makers look to expand their presence in the global market. IC sales to China customers were driven primarily by the high-end of the mainstream technology.

Selling, general and administrative expenses increased 12% year over year to $14.3 million. However, research and development expenses declined0.2% year over year to $4.1 million.

Operating income was $33.5 million compared with $15 million reported in the year-ago quarter.

Balance Sheet & Cash Flow

As of Oct 31, 2021, Photronics had cash and cash equivalents of $276.7 million.

Operating cash flow was $38 million in the fourth quarter.

The company spent $12.5 million to repurchase 937,000 shares.

Guidance

For the first quarter of fiscal 2022, Photronics expects revenues in the range of $178-$186 million.

Earnings are expected to be between 27 cents and 34 cents per share for the fiscal first quarter.

During fiscal 2022, the company expects to spend roughyl $100 million in capex for point tools to supplement and expand existing mainstream IC capacity and for initial deposits on delivery tools in fiscal 2023.

Zacks Rank & Stocks to Consider

Photronics currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the Computer & Technology sector are Arrow Electronics (ARW Quick QuoteARW - Free Report) , Salesforce (CRM Quick QuoteCRM - Free Report) and Advanced Micro Devices (AMD Quick QuoteAMD - Free Report) .

Currently, Arrow Electronics sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The long-term earnings growth rate is pegged at 27.36%.

ARW shares have returned 29.4% year to date compared with the Zacks Electronics-Parts Distribution industry’s growth of 33.6% and the Computer & Technology sector’s return of 25.5%.

Salesforce, another Zacks Rank #1 stock, has a long-term earnings growth rate of 16.75%.

CRM is up 19.7% against the Zacks Computer Software industry’s growth of 39.5% and Computer & Technology sector’s return of 25.5% year to date.

The long-term earnings growth rate for AMD, a Zacks Rank #2 (Buy) stock, is currently pegged at 46.2%.

AMD shares have surged 58.4% year to date compared with the Electronics-Semiconductors industry’s growth of 38.8% and the Computer & Technology sector’s return of 25.5%.